Multiple choice

The following balances in the books of RS Ltd.: 10% Redeemable Preference Share Capital Rs. 4,00,000 General Reserve Rs. 75,000 Securities Premium Rs. 30,000 Profit and Loss (Cr.) Rs. 60,000 Dividend Equalization Fund Rs. 40,000 Workmen Compensation Fund Rs. 25,000 The redemption was carried out on due date, assume that the Company raised necessary bank loan.

Calculate the amount transferred to Capital Redemption Reserve.

  1. Rs. 2,00,000

  2. Rs. 2,30,000

  3. Rs. 1,35,000

  4. Rs. 1,75,000
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A Correct answer
Explanation

Amount utilized for redemption is calculated as below: General Reserve Rs. 75,000 + Profit and Loss (Cr.) Rs. 60,000 + Dividend Equalization Fund Rs. 40,000 + Workmen Compensation Fund Rs. 25,000 = 2,00,000

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